Politics & the Nation
  • Kirit Parikh committee
    • This is an expert committee to suggest reform in the pricing of oilproducts like petrol, diesel etc. It will also recommend how public sector oil marketers are to be compensated for “under-recoveries” in retail sales.
Finance & Economy
  • Central government on giving away spree
    • A slew of decisions announced bring all-round cheer:
      • 1% interest rate subsidy on home loans up to Rs 10 lakh for houses costing less than Rs 20 lakh
      • 5% increase in dearness allowance for central government employees and pensioners
      • Interest subsidy to farmers on crop loans lowered to 2% from 3% for this fiscal to bring down burden on exchequer by Rs 311 crore
      • Target for loan disbursements to agriculture sector revised upwards to Rs 3,25,000 crore for FY10 from Rs 2,80,000 crore a year ago, of which Rs 2,00,000 cr is estimated for loans on crop
      • The cabinet approved restructuring of Bird Group of Companies (BGC), having small steel plants, to public sector units (PSUs) under the ministry of steel. The companies will be allowed to become subsidiaries cum holding companies of Rashtriya Ispat Nigam Ltd (RINL).
      • It gave its nod to the Rs 330 crore grant for setting up six National Institutes of Pharmaceutical Education and Research (NIPER) at Ahmedabad (Gujarat), Hyderabad (Andhra Pradesh), Hajipur (Bihar), Kolkata (West Bengal), Rae Bareli (UP) and Guwahati (Assam), each. The grant is over and above 100 acres of land provided by the respective state governments.
  • Centre, States to form a company to attract foreign investments
    • The government has reportedly decided to set up a not-for-profit company with state governments and the private sector to attract more foreigners to invest in the country. The proposed company, Invest India, will promote foreign investments in the country in a more focused, comprehensive and structured manner. It will facilitate investors’ meetings with officials, hold sector-specific consultations and coordinate with state governments.
    • FDI into the country during the April-July 2009 period stood at $10.53 billion ($12.3 bn in corresponding period last year), 14.5% less than the inflows in the same period a year ago. In 2008-09, FDI reached an unprecedented level of $27.31 billion. Including re-invested earnings, FDI amounted to $ 35.17 billion.
    • The country received 56% more foreign direct investment in dollar terms in July at $3.52 billion than it did last year.
    • Official data showed investments (gross fixed capital formation) grew at a shade over 4% in the April-June period this year as against over 9% in the same time last year.
  • Remembering Lehman collapse
    • We have read much about the global financial meltdown during the last couple of years. But this is one piece that, while recollecting the events that happened in the last two years, is also very scathing in its criticism of some of the decisions that were taken by the US administration in the run up to the meltdown. A riveting read. An excerpt of the strong criticism:
    • Two separate threads run through this global crisis. One is the cyclical downturn due in the advanced economies and, to an extent, in a world over-heated by five years of very strong growth. Central bankers since mid-2004 were tightening monetary policy in response. The world has seen several recessions in the developed world and while the bite may well have been deeper and more prolonged this time round, this was not what caused the train-wreck.
    • It was the second thread – the one that lived and breathed in the world of finance; that was the train wreck. Subprime mortgages were transformed into securities that were regarded as being as good as treasuries. And this alchemy of turning lead into gold was mediated through the sordid magic of diluted standards, abandonment of previous good practice and prudence; and fuelled by huge deal flow and fees in an environment of dysfunctional regulation.
  • Brokers welcome the spread order system introduced by NSE
    • THE National Stock Exchange’s recent move to introduce the ‘spread order’ system, with validity for such trades in an entire session, has been hailed by analysts, as a major step to boost activity in the equity derivatives segment. The new system, which will help traders capture price anomalies between futures contracts more efficiently, is expected to moderate market volatility ahead of the monthly derivatives series expires.
    • A spread order is a combination of futures and options orders that are executed in a single transaction to create a trading strategy. A simple spread order could involve buying and selling a futures contract of two different months to exploit price differences.
    • Earlier, traders had to execute such spread transactions by placing two separate orders, resulting in inefficiencies and uncertainty during the trade execution. As profit margins in such trades are thin, there is very little scope to err. Brokers said trading through this system will reduce the execution errors, especially while rolling over positions from an expiring contract to the next.
Language Lessons
  • fawning
    • Adjective: Attempting to win favour from influential people by flattery; Attempting to win favour by flattery
    • Verb: Show submission or fear; Try to gain favour by cringing or flattering;
    • eg: Moreover, it has once again demonstrated that the malaise no government or political party is immune from is fawning officialdom.
  • daft: Adjective
    • Informal or slang term for mentally irregular
    • eg: Maybe it was a variant of the “Shock and Awe” theme: Shock them with the failure of Lehman, awe them with the fear of another Great Depression and zap them into authorising $700 billion with limitless freedom. It was a daft idea, a terrible one.